Full Press Release Details
MINNEAPOLIS , Feb. 4, 2020 /PRNewswire/ -- Bio-Techne Corporation (NASDAQ: TECH ) today reported its financial results for the second quarter ended December 31, 2019 .
Second Quarter FY2020 Snapshot
The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). Adjusted EPS, adjusted earnings, adjusted gross margin, adjusted operating income, and adjusted operating margin are non-GAAP measures that exclude certain items detailed later in this press release under the heading "Use of non-GAAP Adjusted Financial Measures." A reconciliation of GAAP to non-GAAP financial measures is included in this press release.
"Q2 was a solid quarter of 6% organic growth, especially considering some one-time headwinds we had over last year," said Chuck Kummeth , President and Chief Executive Officer of Bio-Techne. "Our core retail reagents remained strong with double-digit growth in most product categories, while our Genomics' ACD business continued growing at over 20% in Q2. As expected, China continued its trend of above 20% growth while Europe was soft year over year, especially with instrument sales. However, early in Q3, we are starting to see instrument order rates in Europe accelerate to growth rates that we are more accustomed to experiencing."
Kummeth added, "Overall, I am pleased with the team's performance in the first half of the fiscal year. I am also encouraged by the strength in our end-markets and our excellent competitive position and look forward to executing even better in the second half of the fiscal year."
Second Quarter Fiscal 2020
Net sales for the second quarter increased 6% to $184.9 million . Organic growth was 6% compared to the prior year, with foreign currency exchange having an unfavorable impact of 1% and acquisitions contributing 1% to revenue growth.
GAAP Earnings Results
GAAP EPS increase to $3.02 per diluted share, versus $0.45 in the same quarter last year. GAAP EPS was favorably impacted by a gain of approximately $121 million on our ChemoCentryx investment. GAAP operating income for the second quarter of fiscal 2020 increased 10% to $37.0 million , compared to $33.6 million in the second quarter of fiscal 2019. GAAP operating margin was 20.0%, compared to 19.3% in the second quarter of fiscal 2019. GAAP operating margin compared to prior year was positively impacted by volume leverage on sales growth.
Non-GAAP Earnings Results
Adjusted EPS increased to $1.08 per diluted share, versus $1.06 in the same quarter last year, an increase of 2%. Adjusted EPS increased due to revenue growth in the quarter, which was partially offset by foreign currency headwinds. Adjusted operating income for the second quarter of fiscal 2020 increased 9% compared to the second quarter of fiscal 2019. Adjusted operating margin was 33.4%, compared to 32.5% in the second quarter of fiscal 2019. Adjusted operating margin compared to the prior year was favorably impacted by volume leverage on sales growth.
Segment Results
Management uses adjusted operating results to monitor and evaluate performance of the Company's business segments, as highlighted below. Since these results are used for this purpose, they are also considered to be prepared in accordance with GAAP.
Protein Sciences Segment
The Company's Protein Sciences segment is one of the world's leading suppliers of specialized proteins such as cytokines and growth factors, immunoassays, antibodies and reagents, to the biotechnology community. Additionally, the segment provides an array of platforms useful in various areas of protein analysis. Protein Sciences segment's second quarter fiscal 2020 net sales were $141.5 million , an increase of 4% from $135.5 million for the second quarter of fiscal 2019. Organic growth for the segment was 4%, with foreign currency exchange having an unfavorable impact of 1% on revenue growth and acquisitions contributing 1% to revenue growth. Protein Sciences segment's operating margin was 43.0% in the second quarter of fiscal 2020 compared to 43.5% in the second quarter of fiscal 2019. The segment's operating margin compared to the prior year was negatively impacted by the acquisition of B-Mogen in Q4 of FY19 and unfavorable foreign exchange.
Diagnostics and Genomics Segment
The Company's Diagnostics and Genomics segment provides blood chemistry and blood gas quality controls, hematology instrument controls, immunoassays and other bulk and custom reagents for the in vitro diagnostic market. The Diagnostics and Genomics segment also develops and provides in situ hybridization products as well as exosome-based diagnostics for various pathologies, including prostate cancer. The Diagnostics and Genomics segment's second quarter fiscal 2020 net sales were $43.8 million compared to $39.3 million for the second quarter of fiscal 2019. Organic growth for the segment was 12%, with foreign currency exchange having an immaterial impact on revenue. The Diagnostics and Genomics segment's operating margin was 2.2% in the second quarter of fiscal 2020 compared to -2.7% in the second quarter of fiscal 2019. The segment's operating margin was favorably impacted by volume leverage.
Conference Call
Bio-Techne will host an earnings conference call today, February 4, 2020 at 8:00 a.m. CST . To listen, please dial 1-800-289-0438 or 1-323-794-2423 for international callers, and reference conference ID 2359733. A recorded rebroadcast will be available for interested parties unable to participate in the live conference call by going to: http://audio.viavid.com/20200204-137539-bio-techne.mp3
The replay will be available from 11:00 a.m. CDT on Tuesday, February 4, 2020 until 11:00 p.m. CDT on Wednesday , March 4, 2020.
Use of non-GAAP Adjusted Financial Measures:
This press release contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP measures include:
Our non-GAAP financial measure of organic growth represents revenue growth excluding revenue from acquisitions within the preceding 12 months as well as the impact of foreign currency. Excluding these measures provides more useful period-to-period comparison of revenue results as it excludes the impact of foreign currency exchange rates, which can vary significantly from period to period, and revenue from acquisitions that would not be included in the comparable prior period.
Our non-GAAP financial measures for adjusted gross margin, adjusted operating margin, and adjusted net earnings, in total and on a per share basis, exclude the costs recognized upon the sale of acquired inventory, amortization of acquisition intangibles, acquisition related expenses inclusive of the changes in fair value of contingent consideration, and other non-recurring assessments. The Company excludes amortization of purchased intangible assets, purchase accounting adjustments, including costs recognized upon the sale of acquired inventory and acquisition-related expenses inclusive of the changes in fair value contingent consideration, and other non-recurring assessments from this measure because they occur as a result of specific events, and are not reflective of our internal investments, the costs of developing, producing, supporting and selling our products, and the other ongoing costs to support our operating structure. Additionally, these amounts can vary significantly from period to period based on current activity.
Investors are encouraged to review the reconciliations of adjusted financial measures used in this press release to their most directly comparable GAAP financial measures as provided with the financial statements attached to this press release.
Forward Looking Statements:
Our press releases may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements involve risks and uncertainties that may affect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company's actual results: the effect of new branding and marketing initiatives, the integration of new businesses and leadership, the introduction and acceptance of new products, the funding and focus of the types of research by the Company's customers, the impact of the growing number of producers of biotechnology research products and related price competition, general economic conditions, the impact of currency exchange rate fluctuations, and the costs and results of research and product development efforts of the Company and of companies in which the Company has invested or with which it has formed strategic relationships.
For additional information concerning such factors, see the section titled "Risk Factors" in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements we make in our press releases due to new information or future events. Investors are cautioned not to place undue emphasis on these statements.
Bio-Techne Corporation (NASDAQ: TECH ) is a global life sciences company providing innovative tools and bioactive reagents for the research and clinical diagnostic communities. Bio-Techne products assist scientific investigations into biological processes and the nature and progress of specific diseases. They aid in drug discovery efforts and provide the means for accurate clinical tests and diagnoses. With thousands of products in its portfolio, Bio-Techne generated approximately $714 million in net sales in fiscal 2019 and has over 2,200 employees worldwide. For more information on Bio-Techne and its brands, please visit www.bio-techne.com .
| Contact: | David Clair, Senior Director, Corporate Development |
| [email protected] | |
| 612-656-4416 |
| BIO-TECHNE CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited) | ||||||
| QUARTER ENDED | SIX MONTHS ENDED | |||||
| 12/31/19 | 12/31/18 | 12/31/19 | 12/31/18 | |||
| Net sales | $184,934 | $174,510 | $368,177 | $337,480 | ||
| Cost of sales | 63,531 | 61,492 | 128,361 | 116,859 | ||
| Gross margin | 121,403 | 113,018 | 239,816 | 220,621 | ||
| Operating expenses: | ||||||
| Selling, general and administrative | 68,030 | 63,603 | 137,040 | 130,655 | ||
| Research and development | 16,381 | 15,812 | 32,459 | 30,602 | ||
| Total operating expenses | 84,411 | 79,415 | 169,499 | 161,257 | ||
| Operating income | 36,992 | 33,603 | 70,317 | 59,364 | ||
| Other income (expense) | 113,334 | (11,836) | 97,812 | (20,012) | ||
| Earnings before income taxes | 150,326 | 21,767 | 168,129 | 39,352 | ||
| Income taxes | 30,704 | 4,211 | 34,111 | 4,394 | ||
| Net earnings | $119,622 | $17,556 | $134,018 | $34,958 | ||
| Earnings per share: | ||||||
| Basic | $3.13 | $0.46 | $3.51 | $0.93 | ||
| Diluted | $3.02 | $0.45 | $3.40 | $0.90 | ||
| Weighted average common shares outstanding: | ||||||
| Basic | 38,167 | 37,766 | 38,100 | 37,732 | ||
| Diluted | 39,550 | 38,748 | 39,370 | 38,782 |
| BIO-TECHNE CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) (Unaudited) | ||
| ASSETS | 12/31/19 | 6/30/19 |
| Cash and equivalents | $110,293 | $100,886 |
| Short-term available-for-sale investments | 133,657 | 65,147 |
| Accounts receivable, net | 111,753 | 137,466 |
| Inventories | 95,351 | 91,050 |
| Other current assets | 14,020 | 18,058 |
| Total current assets | 465,074 | 412,607 |
| Property and equipment, net | 164,313 | 154,039 |
| Right of use asset | 75,824 | - |
| Goodwill and intangible assets, net | 1,283,953 | 1,312,096 |
| Other assets | 9,251 | 5,668 |
| Total assets | $1,998,415 | $1,884,410 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Accounts payable and accrued expenses | $48,440 | $71,237 |
| Contract liabilities | 11,893 | 9,084 |
| Income taxes payable | 12,851 | 5,764 |
| Contingent consideration payable | 9,871 | 3,400 |
| Operating lease liabilities – current | 9,398 | - |
| Current portion of long-term debt obligations | 12,500 | 12,500 |
| Total current liabilities | 104,953 | 101,985 |
| Deferred income taxes | 104,579 | 89,754 |
| Long-term debt obligations | 370,452 | 492,660 |
| Operating lease liabilities | 71,693 | - |
| Long-term contingent consideration payable | 2,684 | 9,200 |
| Other long-term liabilities | 20,706 | 25,222 |
| Stockholders' equity | 1,323,348 | 1,165,589 |
| Total liabilities and stockholders' equity | $1,998,415 | $1,884,410 |
| BIO-TECHNE CORPORATION RECONCILIATION OF ADJUSTED GROSS MARGIN PERCENTAGE (Unaudited) | ||||||
| QUARTER ENDED | SIX MONTHS ENDED | |||||
| 12/31/19 | 12/31/18 | 12/31/19 | 12/31/18 | |||
| Gross margin percentage – GAAP | 65.6% | 64.8% | 65.1% | 65.4% | ||
| Identified adjustments: | ||||||
| Costs recognized upon sale of acquired inventory | - | 0.5% | - | 0.6% | ||
| Amortization of intangibles | 4.7% | 5.6% | 4.7% | 5.4% | ||
| Stock compensation expense - COGS | 0.3% | - | 0.2% | - | ||
| Gross margin percentage - Adjusted | 70.6% | 70.9% | 70.0% | 71.4% |
| BIO-TECHNE CORPORATION RECONCILIATION OF ADJUSTED OPERATING MARGIN PERCENTAGE (Unaudited) | ||||||
| QUARTER ENDED | SIX MONTHS ENDED | |||||
| 12/31/19 | 12/31/18 | 12/31/19 | 12/31/18 | |||
| Operating margin percentage – GAAP | 20.0% | 19.3% | 19.1% | 17.6% | ||
| Identified adjustments: | ||||||
| Costs recognized upon sale of acquired inventory | - | 0.5% | - | 0.6% | ||
| Amortization of intangibles | 8.2% | 8.6% | 8.2% | 8.7% | ||
| Acquisition related expenses | -0.5% | 0.2% | 0.1% | 0.8% | ||
| Stock-based compensation | 5.7% | 3.9% | 5.3% | 5.5% | ||
| Operating margin percentage - Adjusted | 33.4% | 32.5% | 32.7% | 33.2% |
| BIO-TECHNE CORPORATION RECONCILIATION OF ADJUSTED NET EARNINGS and EARNINGS per SHARE (In thousands, except per share data) (Unaudited) | ||||||
| QUARTER ENDED | SIX MONTHS ENDED | |||||
| 12/31/19 | 12/31/18 | 12/31/19 | 12/31/18 | |||
| Net earnings – GAAP | $119,622 | $17,556 | $134,018 | $34,958 | ||
| Identified adjustments: | ||||||
| Costs recognized upon sale of acquired inventory | - | 935 | - | 1,869 | ||
| Amortization of intangibles | 15,108 | 15,002 | 30,008 | 29,278 | ||
| Acquisition related expenses | (787) | 442 | 617 | 3,158 | ||
| Stock-based compensation | 10,618 | 6,861 | 19,418 | 18,431 | ||
| Realized and unrealized loss (gain) on investments and Other | (120,449) | 7,170 | (110,048) | 9,372 | ||
| Tax impact of above adjustments | 24,132 | (5,649) | 17,151 | (12,361) | ||
| Tax impact of discrete items | (5,384) | (1,110) | (6,655) | (5,286) | ||
| Net earnings - Adjusted | $42,860 | $41,207 | $84,510 | $79,419 | ||
| Earnings per share - diluted – Adjusted | $1.08 | $1.06 | $2.15 | $2.05 |
| BIO-TECHNE CORPORATION SEGMENT REVENUE (In thousands) (Unaudited) | |||||||
| QUARTER ENDED | SIX MONTHS ENDED | ||||||
| 12/31/19 | 12/31/18 | 12/31/19 | 12/31/18 | ||||
| Protein Sciences segment revenue | $141,517 | $135,462 | $282,512 | $261,852 | |||
| Diagnostics and Genomics segment revenue | 43,846 | 39,263 | 86,397 | 76,010 | |||
| Intersegment revenue | (429) | (215) | (732) | (382) | |||
| Consolidated revenue | $184,934 | $174,510 | $368,177 | $337,480 |
| BIO-TECHNE CORPORATION SEGMENT OPERATING INCOME (In thousands) (Unaudited) | ||||||
| QUARTER ENDED | SIX MONTHS ENDED | |||||
| 12/31/19 | 12/31/18 | 12/31/19 | 12/31/18 | |||
| Protein Sciences segment operating income | $60,872 | $58,951 | $120,410 | $113,565 | ||
| Diagnostics and Genomics segment operating income | 975 | (1,054) | 1,875 | 1,482 | ||
| Segment operating income | 61,847 | 57,897 | 122,285 | 115,047 | ||
| Costs recognized upon sale of acquired inventory | - | (935) | - | (1,869) | ||
| Amortization of intangibles | (15,108) | (15,002) | (30,008) | (29,278) | ||
| Acquisition related expenses | 881 | (348) | (429) | (2,973) | ||
| Stock-based compensation | (10,618) | (6,861) | (19,418) | (18,426) | ||
| Corporate general, selling, and administrative | (10) | (1,148) | (2,113) | (3,137) | ||
| Operating income | $36,992 | $33,603 | $70,317 | $59,364 |
SOURCE Bio-Techne Corporation